What is a modified retrospective approach of FASB?

Q: Explain about the modified retrospective approach.

A: Change in accounting principle is a change from one generally accepted accounting principle to…

Q: Why does the FASB recommend the direct method over the indirect method?

A: Definition:   Financial accounting standards board (FASB): This is the organization that creates,…

Q: Explain why reclassification adjustments are necessary.

A:

Q: ions of the study"?

A: Scope refers to the area of the extent or to the limits a study can be studied or explored.

Q: What does overstated mean?

A: Definition of Overstated:- Overstated uses two way terms by accountant: The entered or reported…

Q: Explain how the retrospective approach offers consistency and comparability.

A: Retrospective approach is the principle in which previously issued financial statements are recasted…

Q: What are the major differences between the IFRS conceptual framework and the FASB conceptual…

A: ANSWER     The components of the conceptual framework for ­financial reporting include recognition…

Q: What are some recent trends regarding absolute versus relativepriority doctrines?

A: The priority rules are methods of making payments to the creditors and shareholders in case of…

Q: What is meant by the terms “new issue” and “seasoned issue”?

A: Answer: A new issue is a mentioned to a security, which was first registered, issued and sold to the…

Q: Define the term End-of-Period Convention?

A: Cash flows refer to the amount of cash that is either invested or received by the company during the…

Q: Why should the FIFO method be called a modified or department FIFO method?

A: First-in-First-Out (FIFO):In this method, items purchased initially are sold first. So, the value of…

Q: How does the change in the PBO occur?

A: Projected Benefit Obligation:   It is a pension concept in accounting as it is the present value of…

Q: What are the major procedural differences in applying the current rate and temporal methods of…

A: The key differences related to monetary assets carried at historical cost. Under the temporal…

Q: What is modified breakeven analysis?

A: Break even analysis refers to the financial computation that weights the new business cost, product…

Q: What does the elimination process accomplish?

A: Intercompany elimination:   Intercompany elimination refers to the process in which the transactions…

Q: What is a prior-period adjustment?

A: Statement of retained earnings: This is a financial statement that shows the amount of net income…

Q: What are the characteristics of Substantive Tests?

A: Audit Planning: Audit planning is the first step in the auditing process. Auditor gathers all the…

Q: Distinguish between cumulative or noncumulative?

A: cumulative and noncumulative preferred is assumed since the key term is not given.

Q: When is a GAAP departure appropriate?

A: Definition:   Generally Accepted Accounting Principles (GAAP): These are the guidelines necessary to…

Q: For practical applicationsas opposed to theoretical considerations, which ismore relevant, the CML…

A: Security market line (SML) or Capital market line (CML): The capital market line appears the…

Q: What is a Compilation?

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: What is the difference between the Codification and the Codification Research System?

A: FASB: The FASB is an independent, designated and non-profit organization established by SEC for…

Q: The purpose of adjustments is to?

A: In simple words, adjusting entries are the changes to the journal entries that are already made in…

Q: Which of the following are substantive tests?

A: For identifying whether the following are substantive tests or not we need to first identify what is…

Q: What is Projected Misstatement?

A:

Q: Retrospectively or Prospectively?

A: As per the general principal of IAS 8 an entity must correct all material prior period errors…

Q: Explain Replacement-Analysis Fundamentals?

A: Replacement-analysis fundamentalUnder this, the decision regarding the replacement of obsolete as…

Q: In what circumstances is the compressed adjustedpresent value (APV) model useful, and how wouldit be…

A: The question is based on the concept of adjusted present value (APV). APV uses net present value…

Q: What are some types of divestitures?

A: A divestiture or divestment is the disposal of the company’s assets or a through sale, exchange,…

Q: Define the term confirmatory value.

A:

Q: Explain about the PROSPECTIVE APPROACH: WHEN RETROSPECTIVE APPLICATION IS IMPRACTICABLE.

A: Accounting policies are required to be followed consistently so that, comparability of the financial…

Q: Methods and rules to be followed in case of reconstitution?

A: Solution- It is often noticed that a partnership firm undergoes restructuring. These changes are…

Q: Only sets of non-nominal items that presumably belong to reflective latent factors are acceptable…

A: Definition: Analysis of Factors (EFA): An experiment's variables are analyzed using statistical…

Q: Distinguish between participating or nonparticipating?

A:

Q: Define the term analysis period?

A: The analysis begins with the initial venture expenses and extends through the useful life of the…

Q: What is interim reporting?

A: Financial Reporting:   It refers to the disclosure of the financial results of the organization to…

Q: What is the definition of “retrospective application”?

A: The first book that the company will prepare is the journal book in which all the transactions of…